Iran conflict ripples through corporate earnings as firms hike prices, slash forecasts

The earnings season unfolding across London and New York this week is telling a story that spreadsheets alone cannot capture: a global economy suddenly forced to price in a war it did not anticipate. Companies from paint makers to airlines, from baby formula producers to mining operations, are standing before investors and saying the same thing in different words—the U.S.-Israeli conflict with Iran is real, it is expensive, and nobody knows how long it will last.

The disruption centers on a single chokepoint. The Strait of Hormuz, a waterway through which roughly one-fifth of the world's oil and liquefied natural gas flows, has become a zone of uncertainty. Container ships have been seized. Supply chains that were already strained by tariffs and weak demand have now fractured further. Transport costs are climbing. Raw materials are harder to source. And the companies that must move goods through or around this corridor are facing a choice: absorb the shock or pass it forward.

AkzoNobel, the Dutch paint manufacturer whose products coat everything from cargo vessels to Formula 1 racing cars, offered one of the clearest windows into the math. Chief executive Greg Poux-Guillaume told Reuters that his raw material costs would rise by something in the high teens—meaning somewhere between 15 and 20 percent—over the next two quarters as a direct result of Hormuz disruption. The company beat market expectations anyway, partly because its branded products give it room to raise prices without losing customers. But that advantage is not universal. Competitors with less pricing power face a narrower path.

A Reuters review of company statements since late February, when the conflict erupted, found that 21 firms have withdrawn or reduced their financial guidance for the year. Another 32 have announced price increases. A third group of 31 has warned investors of a direct financial hit. The numbers overlap—some companies appear in multiple categories—but the pattern is unmistakable. Across sectors, the conflict is forcing a reckoning.

Travel companies have been hit hardest. Jet fuel prices have spiked, forcing airlines and tour operators to raise fares, add fuel surcharges, or ground aircraft. Consumer confidence, already fragile, has weakened further. The German tourism group TUI cut its full-year profit forecast and suspended its revenue guidance entirely, citing the conflict's duration as unknowable and consumer caution as a fact on the ground. United Airlines, the U.S. carrier, forecast second-quarter and full-year profits below Wall Street estimates, flagging pressure on demand as a primary driver.

Yet the disruption extends far beyond travel. Danone, the French food company, reported first-quarter sales growth that beat expectations but slowed sharply from the previous quarter—a deceleration the company attributed partly to war-related delays in baby formula shipments, compounded by a separate recall in Europe. Otis Worldwide, the elevator manufacturer, saw new equipment sales hurt by shipment delays and tariffs. Reckitt, which makes Dettol soap, warned of lower first-half margins due to high oil prices, sending its stock to its lowest point since October 2024. Philip Morris factored in a small impact from the Middle East conflict, though it did not expect prolonged effects.

The real question now is whether companies can pass these costs to consumers or whether they will be forced to absorb them and cut forecasts. That depends entirely on pricing power—the ability to raise prices without losing customers—and on how long the conflict persists. GE Aerospace's CEO Larry Culp said plainly that his company would have raised its forecast were it not for current uncertainty. 3M warned that higher oil prices could push product prices up by 50 basis points. TE Connectivity's chief executive said the company would have to pass on higher freight costs and the cost of oil-based products like resin if the war drags on.

Investors and economists are watching to see which way this breaks. If the conflict ends quickly and the Strait of Hormuz fully reopens, supply constraints ease and companies absorb the shock. If it persists, two paths diverge: companies with pricing power pass costs to consumers, risking higher inflation; companies without it cut guidance and reduce investment. The first quarter's results, which captured only one month of Iran-related impacts, offer limited visibility. What comes next—the second and third quarters—will tell the real story.